Tucked away on the west side of the small town of Broad Channel in the middle of Jamiaca Bay is a narrow, dead end, street that goes by the name of West 12th Road. Those of us who live there know that the nice part about living in a small town is that when you are not quite sure what is going on, someone else always does!
[Peter J. Mahon West 12th Road, Broad Channel]

Thursday, January 23, 2014

This fall, a woman called her insurance agent, Ronald Murdock of Murdock Insurance, and asked for an estimate on what she might pay if she bought a house in Wormleysburg.

When she found out flood insurance would go up at least an extra $2,000 a year because of changes to the federally run National Flood Insurance Program under the Biggert-Waters Act, Murdock said she went shopping elsewhere.

In Duncannon, Justin Hooker walked away from buying a house for him and his girlfriend when he learned flood insurance would cost $391 a month for the $90,000 home. That's about what he'd pay on principal and interest.

Local Realtors said the market near the water is frozen. Few buyers are looking to move in, and few sellers can move out.

Neither house has sold since.

"The real crunch," Murdock asked, "is who's going to buy the home?"

Even as the midstate housing market is starting to heat up, local Realtors said the market near the water is frozen. Few buyers are looking to move in, and few sellers can move out.

View full sizeA house at Maple Road and Adelia Street in Middletown is demolished Sept. 3, 2013, two years after being damaged in flooding from Tropical Storm Lee.Janet Pickel, PennLive.com/file

The real fear, said Realtor Dana Little, is what will happen as people find out they've gone underwater financially, owing more on their house than it is worth. When that happened at the height of the financial crisis, a wave of foreclosures occurred. Little said it could happen again.

Local governments and school boards are dreading any devaluation.

They need property taxes to pay the bills. So far, no one has asked Dauphin County to have their home reassessed because of flood risk, but Commissioner George Hartwick III predicts it will happen.

Early estimates show the county's high-risk houses could lose more than $1 billion in assessed value, Hartwick said.

If that happens, it would mean $9 million less in library taxes, $3.25 million less in municipal taxes and $20.8 million less in school taxes. If houses can't sell, or sell for lower prices, less money also will find its way into the county coffers from real estate transfer fees.

That will have to be made up somehow.

Middletown is feeling the hit. Over the years, the federal government has bought out 25 houses that have a history of severe flood damage. That means Middletown receives $100,000 less in property taxes each year, a significant figure for a borough that brings in $2.3 million in taxes and fees annually.